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Matt Hatton, Founder & CEO, Machina Research

Over the last few months Machina Research has been looking closely at the market for M2M Service Providers. This is our term for those companies that are sometimes known as value-added resellers, MVNOs, and a host of different other terms. It comprises the likes of Aeris Communications, Kore Telematics, Maingate Solutions, Numerex, RACO Wireless, Wireless Logic, Wyless and many more. Based on this research we firmly believe that the MSP landscape in Europe is set to get much more competitive.

The European MSP landscape has always been relatively under-developed. There are a few notable exceptions, but generally speaking globally the main success stories in this part of the market hail from the US. And everything points to 2015 being a year in which those big US players attempt to gain greater market share in Europe. Aeris Communications has been expanding the team in Europe, and continues to strengthen its product offering. Wyless, which despite its UK heritage has much more business in North America, recently acquired Dutch MSP Aspider M2M. Kore Telematics, which has relatively little presence in Europe compared to other regions, recently acquired US MSP RACO Wireless and is eyeing the strong potential for European expansion. So, these MSPs, which between them control over 10 million M2M SIMs are pushing more aggressively into Europe. And those are just three amongst many.

And it’s not all overseas pressure. There are a number of homegrown MSPs who are raising their game to compete more keenly. We’d point, for instance, at Arkessa in the UK as one such.

The other competitive factor relates, naturally, to the Communications Service Providers (CSPs) which are also in the same market place. In many cases CSPs see MSPs as a vital partner for reaching parts of the market that many require special capabilities, or which may be otherwise unprofitable for a CSP. Telefonica, for instance, includes a number of MSPs in its Global Partner Programme. However, it’s a moot point where that cross-over point might be between customers that are the natural target of a CSP and those that fall to the MSP. As CSPs rapidly refine their offerings and build expertise, many of the old know-how advantages that MSPs had in the past will be eroded. We’d also note that Jasper Technologies is becoming more active in driving direct relationships with customers and drive them onto its CSP partner networks.

A couple of other changes are on the horizon that promise to help MSPs. Potential bans on permanent roaming, as seen in Brazil, should benefit MSPs where they can support connections through multiple carrier partners. The increasing use of eUICC/subscription management is beneficial, of course, to CSPs as they seek to localise SIMs, but will also be a useful tool for MSPs to move beyond the multi-IMSI approach favoured by many until now.

CSPs are getting better at what they do, US MSPs are heading for Europe, European MSPs are strengthening their offerings, and regulation and technological developments are set to shake up the market. In that competitive maelstrom thank goodness the M2M market is growing at 25%-30% per annum.

Machina Research examines the competitive pressures of the MSP and CSP marketplace, as part of its new M2M Strategies Research Stream: https://machinaresearch.com/what-we-do/advisory-service/m2m-strategies/